Pensioners: Income Support Entitlement (Hansard, 27 July 1999)

§ The Parliamentary Under-Secretary of State (Baroness Hollis of Heigham)
My Lords, the independent evaluation of the pilots has taken longer than originally expected. We hope to have a final report after the summer. Publication will follow as soon as possible after that.
We also commissioned research into why pensioners do not claim their entitled income support, which we hope to publish before the pilot evaluation.

§ Baroness Castle of Blackburn
I suppose better late than never. When the Minister leaked the report during our debates on the Welfare Form and Pensions Bill, she told us that it indicated that certain of the pensioners whose incomes were low enough to qualify them for income support had savings too high to qualify them. Is it therefore going to be the policy of this Government to penalise thrift, and will she say in future to would-be savers among the lower income groups, "You might as well go and have a spending spree"?

§ Baroness Hollis of Heigham
My Lords, today's publication of the Rowntree report suggests that pensioners are doing precisely what my noble friend suggests. They are the new rich and are deciding to spend their money. As regards my noble friend's substantive point, there was no leak; I was giving my noble friend the best information I had. As I have more information, I shall be happy to share it with her in the House.
The number of people who we believed might be entitled to income support is somewhat lower in part because many have substantial savings. Half of those disqualified from income support because their incomes are below income support level have capital of more than £20,000, and 200,000 have capital of more than £50,000. It is questionable whether we should ask taxpayers to support people in boosting their incomes if they have capital on which they can draw.
The other reason we overestimated the number of pensioners who may be entitled to income support, which may be fresh to my noble friend, is that since the early 1990s surveys have incorrectly disregarded the 1391 private occupational pensions which widows inherit on their husbands' death and therefore they have an income higher than originally anticipated.

§ Lord Higgins
My Lords, will the Minister confirm that the limits on capital are low—£3,000 is sufficient to receive a reduced level of income support, but nothing over £7,000? Will the pilot studies give us a precise assessment of the extent to which people do not claim because they have levels of capital of that order?

§ Baroness Hollis of Heigham
My Lords, we have those statistics on a national basis. However, I recognise the problem raised by my noble friend and the noble Lord. The Government are seriously considering the situation of capital limits.

§ Earl Russell
My Lords, will the Minister remind the House when the capital limits to which she referred were last uprated for inflation?

§ Baroness Hollis of Heigham
My Lords, in about 1988.

§ Lord Stallard
My Lords, do the investigations expose people who have not claimed? Will there be any element of retrospection?

§ Baroness Hollis of Heigham
My Lords, no, except in so far as there is the usual backdating, which is a month or up to three months, depending on whether it is an income-related benefit or a contributory benefit. My noble friend raises the key question of how we ensure that people receive the benefits to which they are entitled. That is the point about the pilot schemes. We estimate that 500,000—perhaps 700,000—mainly older, single women who have become widowed are failing to claim on average £15 a week.
Those people are entitled to claim. They do not have capital, and they are failing to claim. Our research shows that that is due to a mixture of ignorance about the benefits system, worries about what may happen to them, the fact that, on claiming for benefit in the past, they were not eligible and therefore refused to claim again, and that their memories are at fault. However, a good piece of news from the findings is that, among those who are eligible but are failing to claim, two years on 25 per cent have gone on to claim. Obviously, we must build on that and ensure that people receive the money to which they are entitled; they cannot afford to go without that money, and we should not let them.

§ Lord Elton
My Lords, will the Minister give an undertaking that the Government will immediately review the capital limits to which she referred, which have not been reviewed for 11 years, and uprate them?

§ Baroness Hollis of Heigham
My Lords, we are keeping them under review. I can give only the answer 1392 that is correct. I am sure that noble Lords would not wish me to give false hopes to the House that I or anyone else can subsequently deliver.

§ Lord Islwyn
My Lords, whatever the merits of the pilot schemes, will the Minister agree that an immediate increase in the basic pension to £75 a week will be a far more effective way of dealing with pensioners' poverty?

§ Baroness Hollis of Heigham
My Lords, I am afraid that I do not agree with my noble friend. It would cost more than £3.5 billion. Some of it would go to the very rich, as the Rowntree report indicated, and the poorest—those on income support—would see not a penny. Frankly, I do not support a policy which would spend a considerable sum of money—£3.5 billion—on aiding the better off and doing nothing at all for the poorest off.

§ Lord Goodhart
My Lords, does the Minister propose to take any steps to ensure that the same problems do not return when the Government introduce their minimum pension guarantee?

§ Baroness Hollis of Heigham
My Lords, we already have a minimum pension guarantee in so far as we have a minimum income guarantee. In that sense, the noble Lord's question is misdirected. However, we are seeking to ensure that pensioners are claiming the money to which they are entitled and it forms a minimum income guarantee for pensioners. It may be that, as a result of the findings of the pilot schemes, we shall need to repackage it, relaunch it, rename it in order, so to speak, to dissociate it from its income support background. In that respect there is a real issue for us to address.

§ Baroness Castle of Blackburn
Will the Minister ensure that when a report is published it contains a figure of the cost involved in funding the pilot schemes?

§ Baroness Hollis of Heigham
My Lords, yes.